(Alliance News) - Zoetic International PLC on Wednesday said it took another step towards exiting its "legacy" natural resources unit, as the now cannabidiol oil firm has agreed to sell a 75% stake in DT Ultravert to Path Investments PLC.
Path, a natural resources-focused investor, will issue Zoetic 15.0 million shares to take the majority interest in the drilling technology business.
Path said: "Path believes that the DTU re-fracking well stimulation technology is a potentially more effective and cheaper method to stimulate conventional and unconventional formations, which the directors of Path estimate could reduce by up to 40% the costs currently associated with drilling and completing a new unconventional well requiring hydraulic fracturing."
As part of the deal, Path will also acquire Zoetic's nitrogen assets in Kansas.
"The transaction is the latest element in Zoetic's strategy to exit from its historic natural resources business and transition to a focused CBD and hemp business," Zoetic explained.
Formerly known as Highlands Natural Resources PLC, the company changed its name in back in September, owing to its plans to eventually focus solely on its cannabidiol operations.
Zoetic said on Wednesday: "The board believes it will achieve material cost savings during the current financial year compared to the year to March 31, 2020 from its exit from its legacy natural resources business, of which the transaction is a key element."
Zoetic shares were 3.8% lower at 4.52 pence each in London on Wednesday afternoon. Path shares are currently suspended from trading.
In August 2019, the investment company said it has agreed to acquire FineGems Extraction in an all-share deal which would give the FineGems vendors a 50% stake in Path.
On Wednesday, Path said the share purchased agreement with FineGems expired, without being completed.
"Based on the company's due diligence and feedback from potential investors, and from Path's own advisers, the directors concluded that, whilst the FGE asset was attractive and offered clear potential, the transaction would not have been viable as originally conceived."
By Eric Cunha; ericcunha@alliancenews.com
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